India's refined edible oil imports from Nepal have jumped to an estimated 8.04 lakh tonnes in 2025 from 47,295 tonnes in 2023. This rapid increase under the SAFTA framework has raised concerns among domestic producers regarding potential threats to local refining businesses.
A massive rise in refined edible oil imports coming from Nepal into India has sparked a debate on trade policy. According to data highlighted by the Indian Vegetable Oil Producers' Association (IVPA), imports of these oils have grown significantly under the South Asian Free Trade Area, or SAFTA, agreement. The volume of these imports was 47,295 tonnes in 2023, rose to 1.24 lakh tonnes in 2024, and is expected to cross 8.04 lakh tonnes in 2025. This indicates a sharp increase of over 17 times within a two-year period.
Impact on Domestic Refiners
The domestic edible oil refining industry is expressing concern over this trend. Indian refiners generally rely on the import of crude edible oils, which are then processed within the country. This value-addition process supports local jobs and manufacturing infrastructure. When refined oil is imported duty-free under trade agreements, it creates a cost advantage for the imported product compared to oil refined domestically. If the trend continues, domestic refiners may face pressure on their profit margins as they compete with lower-cost refined imports.
Trade Framework and Policy Review
The SAFTA framework was designed to encourage regional trade cooperation. However, the IVPA has pointed out that the current scale of imports suggests a need for an urgent policy review. The primary goal of such a review would be to ensure that trade policies support India's domestic refining capacity and long-term food security objectives. Industry stakeholders are concerned that if imports from Nepal continue to grow toward the one-million-tonne mark, the domestic refining sector could face a significant structural challenge.
Future Monitorables for Investors
For investors in the edible oil and FMCG sector, the primary monitorable is whether the government introduces any adjustments to trade duties or import regulations regarding refined oils from neighboring countries. Changes in these policies could influence raw material costs, pricing power, and the overall profitability of listed edible oil companies. Investors should also watch for any official government response or new trade safeguards that might be implemented to protect the domestic refining industry from this surge in imports.